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Japan's Nikkei rallies on fresh optimism over AI, Iran peace talks
Japan's Nikkei stock average rose by the most in two weeks Thursday, thanks to renewed interest?in technology stocks?and the easing of geopolitical tensions?related?to the Iran War. The Nikkei Index benchmark rose by 3.14%, closing at 61.684.14, the highest one-day gain since May 7. The Topix index, which is a broader measure of the Nikkei 225 Index, rose 1.64% to 3,5853.81. The Nikkei mirrors Wall Street gains ahead of earnings forecast by AI powerhouse Nvidia. The oil prices fell sharply overnight, after U.S. president Donald Trump said that negotiations to end war in Iran are in their final stages. This eased supply concerns. Investors also received a boost from the averted 'labour strike' at Samsung Electronics which could have disrupted South Korea’s economy and global supply of chips, as well as reports that OpenAI was preparing to become public. SoftBank Group, a major shareholder in the company, and other AI ventures, surged up to its daily maximum. "The market is being led by AI and semiconductor-related shares ?following developments including the avoidance of a strike ?at Samsung ?Electronics and Nvidia's earnings," said Wataru Akiyama, an equities strategist at Nomura Securities. The drop in crude oil has led to?gains for a variety of?sectors." The Nikkei Index saw 140 advancers and 85 decliners. SoftBank Group was the largest gainer, with a 19.9% increase, followed by Socionext at 19% and Ibiden at 14.3%.
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Danantara Indonesia will honor commodity export contracts but will review prices
Danantara, the Indonesian sovereign fund, will honor existing export contracts while reviewing them to ensure that prices do not fall below market levels. This was announced by its chief executive on Thursday. The fund is preparing to take over the top commodity shipments of the country. The fund's chief executive said that a unit will be the sole exporter of ferroalloys, coal, and palm oil as soon as September 1. This is because the government wants to tighten control over the tax revenue and foreign exchange earned from commodities. Danantara CEO Rosan Roeslani stated that the sovereign wealth fund may negotiate prices that are below benchmarks when it has visibility of pricing. "We ?will respect all existing contracts. We see that, even though these are long-term agreements, the price is not set at the time of the contract, but rather when it is in effect. Rosan said that if we find a contract with a price below the?world index', we would review it. He said: "If there is any indication that a contract has been under-invoiced, we will certainly re-evaluate it." Exporters have a transition period of three months from June 1 that could be extended to six months. During this time, they must report the value, volume and price points for their goods. Last year, Indonesia exported $65 billion worth of thermal coal, nickel and palm oil. Prabowo’s plan is designed to address concerns over under-invoicing, and how exporters are able to account for transfer prices. However, it has caused financial markets concern this week. The rupiah currency fell 0.4% on?Thursday to trade close to a record low established?on Wednesday. The Trade Ministry will soon issue implementing regulations. Eddy Martono is the chairman of GAPKI, an association of palm oil companies. He said that his industry faces many questions. For example, what happens when buyers request specific specifications for a shipment. Exporters have usually their own markets. He said that we must not lose these markets because of poor management. Gita Mahyarani, executive director of the Indonesian coal mining association, said that they were concerned about long-term agreements, specifications on coal quality, and financing obligations. The Indonesian Nickel Industry Forum said that it would wait for the regulations documents and additional explanations before making an impact assessment. (Reporting and writing by Bernadette Cristina and Fransiska Nanangoy; editing by John Mair).
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Sources say that RPT-oil refining in central Russia has been halted after drone strikes by Ukraine.
According to official sources, almost all of the major oil refineries in central Russia have been forced to reduce or halt their fuel production due to recent drone attacks by Ukraine. Moscow has already banned gasoline exports from April to the end of July. Refineries which have stopped operations or are partially stopped, together, produce more than 83 million tons of?product per year. This is approximately 238,000 tons a day. According to anonymous sources and data, this represents around a quarter of Russia's entire refining capacity. Over 30% of Russia's gasoline is produced by refineries, and around 25% by diesel. The?Russian?energy minister did not respond to a comment request. According to Russian officials, Ukraine has intensified drone attacks against Russia's energy infrastructure. The number of oil refineries that have been targeted by Ukraine since the beginning of the year has doubled. The strikes have affected pipelines, storage facilities and Russia's oil production, the third largest in the world after the U.S. Kirishi, a refinery in western Russia, the Moscow refinery, as well as the plants in Ryazan, Yaroslavl, Nizhny Novgorod, on the Volga River, are all included in the list of oil refineries that have been targeted. According to sources, Kirishi with a capacity of 20 millions metric tons per annum, is now completely closed. Another major refinery, Nizhegorodnefteorgsintez (NORSI), with ?annual capacity of 17 million tons, was attacked on May 20. NORSI's ability to continue partial operations is still unclear. (Reporting and editing by Guy Faulconbridge, Bernadettebaum)
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Mike Dolan: Trump's biggest problem could be the 'true cost of living.'
Most households include the cost to live in the cost of their money. If borrowing costs increase again to "choke off inflation", the political fallout may rival the cost of living backlash that plagued Democrats in the 2020 election. For many reasons, the U.S. In his first term and second, President Donald Trump repeatedly called for lower interest rates. No doubt, the mood of electorate is one of them. The Iran War and the energy shock that accompanied it have, most likely, pushed inflation above 4% in this month. Gas prices are also more than 40% higher compared to a year earlier. This mood has already soured. The University of Michigan’s monthly consumer survey revealed that its main sentiment reading plunged to a new record low in the month of May. This was lower than any other point in the series, which dates back to 1960. Even among Republican voters, public opinion polls show a similar picture. According to the most recent /Ipsos survey, only 47% of Republicans approve of Trump's performance on cost of living. 46% disagree. Just one out of five Americans approve of Trump's performance on cost of living. This puts a spotlight on Trump's apparent softening of his stance this week regarding interest rate cuts, as Kevin Warsh takes over the Federal Reserve. Trump said to the Washington Examiner that Warsh could do whatever he wanted on interest rates. This is in stark contrast with the previous year when he lambasted the outgoing Jerome Powell. This may have been just another throwaway comment from Trump. It may also be an acknowledgment that Warsh will have to lead Fed actions to reign in rising inflation. This could mean holding off on any further rate cuts or, if the futures markets are correct, increasing rates by year's end. The White House may have calculated that the public wants some assurances the Fed can do its job. There is a tense situation that Trump's predecessor Joe Biden, and Democratic candidate Kamala Harris faced as they approached the 2024 elections. Consumer sentiment and approval ratings of the administration sagged in the run-up to the election despite a recovering economy, stock market and declining inflation. The "cost of living" was the top complaint of voters. SICK AND CURE? There are two main economic reasons that are frequently cited. First, even though inflation rates had dropped by half from their peak in 2022 at the time of the election, the rise in prices cumulatively over the past four years was still a concern for households whose wages hadn't kept pace. Regardless of the rate at which prices rose, the consumer price indexes increased by 17% during Biden's tenure. Since Trump's return, they have risen by 4% more. Second, the Fed's solution to curbing price inflation is higher borrowing costs. In a 2024 paper, Larry Summers Marijn Bolhuis Judd Cramer discussed how the "true cost-of-living" has affected household sentiments over time. This complicates any assessment on voter pain because it captures both the inflation-disease and the interest rate cure. They wrote: "The cost of money for consumers is part of cost of living." The "alternative cost of living" measure that includes home loans, car financing, and credit card borrowing, rose 14% by 2023, while consumer price indexes only increased 4%. As inflation increased, markets began to question whether the Fed might be forced to increase policy rates. This has increased consumer borrowing costs. Even though the Fed rate has fallen well below its 2024 peak, credit card, auto loan, and fixed-rate mortgage costs are still more than 50% higher than they were before COVID-19. The Misery Index, a measure of inflation and unemployment that combines the 10-year Treasury borrowing rates, is at its highest level since February 2023. The Fed might feel that it must act immediately to curb inflation expectations and regain credibility in meeting its 2% target, which it has missed for many years. The markets understand the logic, but not everyone does. Even if the Fed's tightening of monetary policy eventually brings inflation under control, political backlash among Americans may be exacerbated by doing what policymakers "think" is right. Trump could be in a difficult position. He may have to decide whether he wants to support the Fed's actions or not. Biden's approval ratings were not boosted by Biden's support for the Fed's late, but severe action to control inflation between 2022 and 2023. But it is anyone's guess what the inflation rate might have been if they hadn't taken any action. The temptation for Trump to use the Fed to blame the public's dissatisfaction with the economy could be too much in the end. The opinions expressed are those of Mike Dolan a columnist at. This column is great! Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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Governor of Samara Region, Russia: Two killed in drone attack on Syzran
The local governor reported that two people had been killed in a drone strike on Syzran, a town located on the Volga River in Russia's Samara Region. Ukraine also reported a death toll of two as both sides traded attacks over the night. Syzran is a large oil refinery located about 1,000 km from the Ukrainian border. In a post on Telegram, the Samara Governor, Vyacheslav Federishchev, did not mention whether infrastructure had been damaged. Authorities reported on Telegram that three people were also injured in another drone attack, this time in the town of Shebekino, in Russia's Belgorod Region bordering Ukraine. Emergency services in Ukraine reported on Telegram that two people were killed and several others injured after Russia struck the Chernihiv area on the Russian border as well as southeastern Dnipropetrovsk. We could not independently verify these reports. Russia and Ukraine deny targeting civilians. Peace efforts to end war, which began with Russia's invasion of Ukraine in 2022, have stalled. Both sides are exchanging regular attacks against each other. This includes strikes on energy infrastructure. In an address delivered overnight, Ukrainian 'President Volodymyr Zelenskiy said that there has been a recent 'productive contact with the U.S. which is trying to mediate the talks to end the war. "If we can return in the next few weeks to meaningful trilateral communications and include the Europeans, that would be the best outcome," Zelenskiy stated. "We are prepared for such steps." I trust that our partners will be prepared, and the Russians won't hide. (Reporting and editing by Lincoln Feast in Tokyo, with Jekaterina Glubkova reporting from Tokyo)
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Arafura, Australia approves rare earths project worth $1.6 billion
Arafura Rare Earths announced on Thursday that it has approved the development of its $1.6 billion Nolans Project in the 'Australian Northern Territory', which will 'become 'the third-largest rare earths operations of the country by the end of this decade. The project is designed to deliver 4,440 metric tons of neodymium-praseodymium (NdPr) oxide annually, targeting markets outside China amid growing demand for rare earths used in electric vehicles and wind turbines. Arafura has secured financing commitments with the export credit agencies in the United States, Canada and Germany, as well as global trading houses and manufacturers. This is because Western countries are increasing their efforts to diversify and move away from the dominant 'rare earths' producer China. Arafura is supplying South Korean automakers Hyundai, Kia and Siemens Gamesa RE in Germany, as well as commodity traders Traxys Luxembourg and the United States. units. Arafura shares rose 13.6% intraday to A$0.335, their largest intraday gain since 11 March. As of 0440 GMT, the benchmark stock index was up 1.5%. Construction of the project will begin in September. First production is expected in mid-2029. Arafura has secured a funding package of $1.6 billion, including a significant cushion, and is backed Gina Rinehart. Hancock Prospecting, Gina Rinehart's company, owns 15.5%. RAISING THE GLOBAL SOURCE Arafura is Australia's third largest rare earths producer, after Lynas Rare Earths (the world's biggest producer outside China), which produced 6,600 tons of?NdPr during the last financial period, and Iluka which has a capacity of 5,500 tons and will start production in 2019. Arafura will supply 500 tons of NdPr for the country's strategic mineral reserve by the end of the year. According to Australian government estimates, the project is expected to meet up to?5% of global demand. "This announcement is a really important step forward for Australia's rare earths industry", said Treasurer Jim Chalmers. Rare earths represent a golden opportunity for the United States. This is essential for our economic security and national security. Arafura has engaged engineering contractor Hatch to support the development. The final investment decision was made after a multiyear financing and offtake plan.
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TBS: Japan considers an extra budget of $19 billion
TBS, a Japanese broadcaster, said that Japan was considering a supplementary?budget of about 3 trillion yen (19 billion dollars) for the current fiscal year in order to prepare for a prolonged Middle?East crisis. The report was released after Prime Minister Sanae Takayichi said on Monday that she had asked the cabinet to consider a supplementary fund to help cushion the blow to the economy caused by the Iran War. TBS reported that the extra budget of 3 trillion yen was one idea being floated by the government. About 500 billion yen from the amount would be used to fund the rollout?of gas and utility subsidies starting in July. It added that the government would issue new debt in order to finance its spending. However, rising tax revenues could allow it to limit issuance. The Japanese finance ministry did not respond to a request for comment. Japan uses existing funds to subsidise utility bills and may revive them. The extra budget will be added to the record 122 trillion-yen 'budget' for the fiscal period that began in April. This is the core of the expansionary fiscal policies pursued by the premier. Critics say that a combination of more spending plans and slow rate 'hikes' by the Bank of Japan could increase inflationary pressures in an economy already experiencing rising energy prices from the Middle East war, as well as higher import costs due to a weaker yen. The yields on Japanese government bonds (JGBs) jumped to multi-decade records this week, partly due to concerns about the country's worsening financial situation. Reporting by Chang-Ran Kim, Editing by Himani sarkar and Clarence Fernandez.
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Japan's Nikkei rallies on fresh optimism over AI, Iran peace talks
The Nikkei 225 index rose more than 3.5% Thursday, the biggest gain in two-weeks, thanks to renewed interest in 'technology stocks' and a easing of geopolitical tensions related to?the Iran War. If the current momentum continues, the benchmark Nikkei Index will be on track for its biggest daily gain since May 7 if it maintains this pace. The Topix index rose 2.21% to 3,875.34. The Nikkei was up ahead of Wall Street's gains before earnings from AI bellwether Nvidia. Nvidia forecasted sales that exceeded market expectations. Oil prices fell sharply overnight after U.S. president Donald Trump announced that negotiations to end war in Iran are?in their final stages, alleviating supply concerns. Investor confidence?was also boosted by the averted strike at Samsung Electronics that could have disrupted South Korea’s economy and global supply of chips, as well as reports that OpenAI was preparing to become public. SoftBank Group, a major shareholder in the AI company and other ventures, surged up to its daily maximum. "The market is being led by AI ?and semiconductor-related shares following developments including the avoidance of ?a strike at ?Samsung Electronics and Nvidia's earnings," said Wataru Akiyama, an equities strategist at Nomura Securities. We're seeing gains in a variety of sectors as a result of the fall in crude oil prices. The Nikkei Index saw 156 advancing stocks versus 69 declining ones. SoftBank Group was the largest percentage gainer, with a 19.9% increase, followed by Socionext which increased 17.2% and Ibiden trading at 15.2%.
US official: US and Philippines will reach agreement on economic security zones'sooner than later'
A senior U.S. Official said that the United States will likely reach an agreement with the Philippines on a long-term framework for an economic zone "sooner than later".
Washington is aggressively expanding?its supply chain alliance for technology?known by the name "Pax Silica". The official, Jacob Helberg, said both countries had a 2-year window in which to finalize the arrangements as per a pact signed last month.
Helberg, U.S. Undersecretary of State for Economic Affairs, said in an interview that both parties would also set sectoral priorities for industrial activities in the area.
He said that "there's a lot of momentum behind it."
The Philippines became the 13th nation to join Pax Silica last month, a program that seeks to protect the entire technology supply chain from critical minerals to advanced manufacturing, to computing and data infrastructure.
Helberg stated that the alliance has grown quickly to 15 members from seven founding members last September.
He added, "We're likely to be at 16 members by the end next month because we will probably add one or two over the next four-week period."
Bloomberg reported on Monday that while Washington has pushed ahead with the framework and requested diplomatic immunity for the area, the Philippines had not yet agreed to the request.
Helberg was joined on Monday by representatives of over a dozen U.S. firms, including 8VC, Agility, Joby Aviation, and Valar Atomics.
A photo posted on?X revealed that Young Liu was part of the delegation. He is the chairman of Foxconn, the largest contract electronics manufacturer in the world.
Helberg said that, while it was still early, the level of interest from both companies who attended and other U.S.-based firms had been high.
He spoke at the 'ATX summit' in Singapore where he met digital ministers from the 11 member regional grouping, Association of Southeast Asian Nations.
Helberg told reporters that he spoke to Singaporeans, as well as "a few others," about opportunities in minerals and logistic. Reporting by Fanny Potkin and Jun Yuan Yong; editing by Clarence Fernandez
(source: Reuters)